4622 Communicare Annual Report 2015 FA 2 lowres[1]

ANNUAL OVER YEARS

2015R E P O R T

1

OVER YEARS

CODE OF Fairness
ETHICS
We are fair and act without prejudice in all our dealings with
We the Directors, Management and Staff of Communicare declare our colleagues, suppliers and the public.
commitment to build an equitable society, to leave better than we found
and to uphold the following code of ethics in our conduct: We act without prejudice. We treat all fairly regardless of race, age, gender,
physical ability, religious creed, political views and sexual orientation.
Integrity
Accountability
We deliver what we promise and act with integrity. We are honest in
all our dealings with each other and all our stakeholders. We are accountable and reliable and manage all our resources for
the benefit of society.
We shall be honest in all our dealings with each other, with those whom we
serve and with those who may depend on us. We will not steal company We are punctual. We take pride in our work and strive for excellence at all
property, or the property of other people, nor use such property for our times. We do not exploit company time to engage in our personal activities
personal gain without permission. We will not steal time by shirking off, being and we treat environmental, economic and social resources as public
lazy, or by taking sick leave when not sick. We will not support untruths, assets. We do what we commit ourselves to doing and take responsibility
tell lies or attempt to deceive. We will not offer bribes or incentives for our actions and decisions.
to any person nor accept gifts or favours in order to gain benefits for
ourselves or an unfair advantage for the company. We will not enter into Confidentiality
any arrangement which could create a conflict of interest between the
company and ourselves. We uphold confidentiality.

Respect We obtain proper authorisation before disclosing to colleagues, external
parties including the media, any confidential information including business
We respect each person as a unique individual, and the environment plans, transactions and personal information about our employees and
we live and work in. customers. We do not canvass or entice colleagues to divulge confidential
information. We ensure that all our records are properly filed and that only
We believe and demonstrate that people matter most. We show respect authorised personnel has access to confidential information.
by the use of our language, manners, friendliness, by listening to others,
respecting their privacy and in the way we conduct our business. While we We accept with pride our part in building South Africa, our role in
may not agree with them, we will respect their right to hold differing political, Communicare and our responsibility as ambassadors of reconciliation
religious or other views. We will respect the rule of law and uphold the spirit and excellence.
of the South African Constitution. We will respect the environment by not
destroying, polluting or irreparably damaging it and will build and develop
for the long term.

VISION

To be an innovative contributor to building an equitable
society characterised by dignity, self-awareness, access to
opportunities, active involvement and community cohesion.

MISSION

To provide affordable housing sustainably in Cape Town for people of
relatively low regular incomes with opportunities for economic upliftment.

CONTENTS

Strategy 1

Chairperson’s Report 3

Board of Directors 4

Chief Executive Officer’s Report 5

Executive Committee 8

Rental Property Management 11

Community Development 15

Property Development and Investment 17

Cape Retirement Lifestyles (CRL) 19

Human Resources 21

Marketing and Stakeholder Engagement 24

Information Technology 25

Corporate Governance 27

Risk Management 32

Value Added Statement 33

Statement of Financial Position 34

Statement of Comprehensive Income 34

Statement of Cash Flows 35

Reyger Court

STRATEGY Cross
Financing
As a social enterprise Communicare is focussed
on two spheres of operation: Model
• Providing accommodation to people of
FUNDS
relatively low regular incomes in the Cape
Town metropolitan area at affordable rental Portfolio of property Increased affordable
rates and at affordable prices for first time leased and sold on social rental stock
homebuyers. the open market
• Coordinating a focused social development dreams • Educa
programme that addresses the economic Affordable ls • Hopes and easinddenrteianl tparlospinerttyhedeovpeelonpmmeanrkt,estales MISSION
mobility of Communicare tenants. Social Affordable rental accommodation
Rt skills • Life skil To provide affordable
Compensating for the absence of operating 6000 Rentals housing sustainably in Cape
subsidies from the state, our business model cross- Town for people of relatively
finances affordable rental accommodation with 5000 low regular incomes with
commercially viable property development and 4000
management. 3000 opportunities for their
2000 economic upliftment
As property manager we hold residential 1000
properties for rental at affordable rates and in Social development programme
the open market. As a property developer we 2015 2020 2025
acquire and develop residential property to hold
long term or for sale. Tenants graduate out
of social rental market
To improve our sustainability and impact in the
affordable housing sector our medium-term tion • Job marke
strategy is to develop a substantial portfolio of Social
residential apartments leased in the open market.
The annuity income from this portfolio will enable Development
us to provide more affordable social rental stock Programme
and to do so more sustainably. In the short
term this means gearing our balance sheet for Tenants partner New eligible tenants
growth, upgrading several aging properties and with Foundation are able to benefit
adapting our service offering to tenants. from social housing

1

Path to Sustainability The Path to Sustainability: Vision 2025
2015 - 2025
By 2025 we will be recognised for our excellence,
14000 units 2025 boldness and innovation as a leader in the
5400 social rentals affordable housing market. Our innovative
8600 open market rentals approaches to raising capital, urban regeneration,
15% cost to income ratio facilitating economic mobility and to our
business model will be enhanced by a vibrant
5200 units 2020 organisational learning culture. Our sustainable
2200 social rentals portfolio of properties will provide affordable
3000 open market rentals accommodation to over 10000 households whose
40% cost to income ratio lives are transformed through their tenancy with
us. By including a substantial rental portfolio in
the open market the organisation will be able to
provide subsidised accommodation to over 1000
people reliant on the Old Age Pension Grant.
Communicare’s social rental complexes will be
places in which families and communities thrive and
where people can pursue their own development.

Social Development

Our exciting new social development programme,
housed in the Communicare Foundation, focuses
on creating an environment that supports the
economic mobility of our tenants. By addressing
economic inclusion, the programme tackles the
effects of structural poverty. This requires a multi-
faceted approach and we will forge partnerships
to make successful interventions in the fields of
education, job market skills development, life-skills
and financial literacy.

2015 3375 units
3375 social rentals
60% cost to income ratio

2

CHAIRPERSON’S To gear up, Communicare is undergoing many changes. Change is happening at an unprecedented rate
REPORT all around us and we need to be cognisant of this. As John F Kennedy said,

It is my pleasure as Chairperson of the Board of Directors to present “Change is the law of life. And those who look only
Communicare’s 2015 Annual Report. The past year has been both challenging to the past or present are certain to miss the future”.
and encouraging.
The organisation has recognised that it cannot be part of the future it is imagining without embracing
As a collective, Communicare’s leadership has committed the organisation change. Nevertheless, change is hard, uncomfortable and full of uncertainty; it pushes us out of our comfort
anew to address one of South Africa and the Western Cape’s most urgent zones. Despite this, we are embracing it with courage in order to make a bigger contribution to solving
problems - affordable housing provision for those most in need. Adequate Cape Town’s housing crisis.
housing is a basic human right denied to many millions of our fellow citizens.
The organisation is deeply concerned about the 250 000 families who live in I thank our management and staff for emboldening themselves to walk this path. The changes we make will
our city in informal housing. Each year, these families suffer during winter as they help us remain relevant and able to make a larger, better impact. Key to this is improving efficiency and
battle floods, the cold and gale-force wind. It is deeply disturbing that so many effectiveness. Bringing about change is a process and not an event; it will no doubt continue over time as
people still live like this in our beautiful city, where so few others have so much. we continue to learn and adapt to the changing context, while delivering on our mission.
Our leadership considers it a privilege to be entrusted with the responsibility
to steer Communicare to play a part in addressing this huge, important and In conclusion, there is a quote that resonates with me,
challenging problem. Our team accepted this responsibility with professional
and personal commitment when we adopted the organisation’s new vision and “Learning and innovation go hand in hand.
mission statements during the review period. These statements have guided the The arrogance of success is to think that what you did yesterday
organisation’s leaders in crafting our strategy for the years ahead.
will be sufficient for tomorrow”
We are excited by how much more Communicare can contribute to addressing
the housing crisis and encourage each and every South African to question (William Pollard).
whether we are doing all we can. What more can we do to improve the lot of
our fellow citizens and to build a more inclusive society? Communicare is well-resourced and has existed for more than 85 years. During this rich life-time we have
mastered some things and have also learned many lessons. We now use our collective wisdom to garner
At Communicare, we have a great opportunity to do more and the Board the resources in our control to benefit those in need of access to housing.
has mandated our CEO and management to ensure that we grow our rental
portfolio so that we can impact the lives of many more people. In the year
ahead, we look forward to engaging our strategic public and social partners
on how they can support this drive.

3

BOARD OF
DIRECTORS

Left to right: Isaac Matheta Swafo, Roseline Nyman, Lala Steyn, Nosiphiwo Balfour (Deputy Chairperson), Monde Skade, Nicky Swartz,
Amelia Jones, Pramod Daya, Lusanda Netshifhefhe, Martin Kearns, Anne Emmett (Chairperson) and Anthea Houston (CEO)
Absent: Nonhlanhla Mjoli-Mncube, Noëleen Murray-Cooke and Kholeka Zama

4

CHIEF EXECUTIVE OFFICER’S
REPORT

During the financial year, we provided safe, secure affordable accommodation to 3375 households This is necessary for the survival of our affordable housing rental business which does not receive
in Cape Town. Considering the limited supply of affordable housing in our country and city, many any operating grants or subsidies from the state.
of these households have few alternatives to the housing supplied by Communicare. For many
others, the benefits of urbanity such as economic participation, access to education and culture, During the year, the Social Housing division achieved its performance targets with rent collections
are elusive. This reality prompted us to consider how we can increase the supply of affordable at 104%, a vacancy rate of 0.51% and bad debts of 1.67%. An amount of R 15,319,866 was spent
rental housing. in capital works on corrective and scheduled maintenance in our properties. Rental income of
R80.7m resulted in a net yield of 1.19% for rental property and a challenging cost-to-income ratio
We studied the results of the comprehensive external evaluation completed in the preceding at 60.22%. We will use a multi-pronged strategy to continue improving performance in the years
financial year. The evaluation challenged us to look at how we manage and invest the resources ahead: this includes reducing costs, reducing the high and unsustainable level of subsidisation of
under our control. The analysis showed that we needed to change our approach to managing tenants and also increasing revenue through the growth of the rental portfolio.
our properties to avoid eroding the organisation’s assets and that a step-change was necessary
to meet our objective to provide more affordable housing opportunities. The properties we developed in 2015 generated sales revenue of R 87, 076, 191 representing
45% of total revenue and making a substantial contribution to our bottom line. This will enable us
As we could not maintain the status quo, we examined our strategies. We imagined a future to invest in the growth of our rental portfolio, a major component of our plans. We will commence
Communicare, innovative and bold, serving thousands more families in need of affordable housing. work on re-developing several properties to increase their yields.
These ambitions are expressed in our plans. Implementing these plans has come with challenges,
change and learning as we try to build a bridge between our reality and the dreams and Social housing delivery in South Africa continues to be constrained by the static quantum of the
aspirations we have for Communicare. capital grants and the contradictory regulations relating to the target market for social housing and
the sustainability of social housing institutions. Although the sector has lost valuable momentum, the
Our strategy is summarised in this report and reflects our continued commitment to providing affordable situation is not intractable and Communicare lobbied actively along with the National Association
rental accommodation to the people of Cape Town. Going forward, we place emphasis on doing of Social Housing Organisations (NASHO) for the resolution of these barriers to increased social
this sustainably so that our assets, entrusted to us for the public good, are not depleted. housing delivery.

This means creating a reliable recurring income stream Overall, as indicated in the report, our financial results were a pleasing improvement over the
to subsidise our social rentals from a new market rental prior year. We expect the demand for affordable housing to increase in the face of increased
portfolio rather than solely from unreliable property sales. job losses, rising energy costs and subdued growth in the South African economy. We consider it
urgent that we employ our capital and forge partnerships that will enable us to deliver against
our social mandate through the production of more affordable rental housing opportunities. While
the context is challenging, we are committed to our cause and to improving continuously as we
explore new solutions to the problem of affordable housing delivery.

5

Bothasig Gardens

6

The Rathfelder

7

EXECUTIVE Anthea Houston, Chief Executive Officer
COMMITTEE
Anthea Houston has a Postgraduate Diploma in
Communicare’s executive team is collectively Management: Organisation and Management from the
accountable for overall organisational performance. University of Cape Town (UCT) and will graduate with an
The team takes responsibility for vision, alignment and MBA from UCT’s Graduate School of Business in December
deployment; creating a culture of empowerment and 2015. She has worked in the housing sector as an advocate
developing commitment. As such, the team supports the for housing rights and sustainable urban development.
CEO in formulating strategy, identifying and managing
strategic issues, handling significant operational She contributed to the development of various housing
matters and in ensuring effective and aligned internal policies and has regularly commented on housing issues in
systems and communications. the South African media.

She was Chief Executive for Development Action Group
(DAG), a South African non-profit organisation focused
on low-income housing and urban development and
responsible for the development of over 5000 low-income
houses. Anthea developed an understanding of the east
and southern African regions through field studies while
conducting research on housing and housing micro-finance.

She has served on advisory panels and reference groups
for three former ministers of Local Government and Housing
in the Western Cape.

Anthea is a fellow of the African Leadership Initiative and
a member of the Aspen Global Leadership Network, both
programmes of the Aspen Institute (USA.).

8

Neville Fowler, Chief Financial Officer Accountant responsible for statutory and management reporting.
Neville joined Old Mutual Properties (OMP) and worked
A chartered accountant by profession, Neville acquired in various senior management positions including Financial
qualifications from the University of the Western Cape (UWC), Manager and Investment Manager responsible for strategic
UNISA and University of Johannesburg (UJ). management of subsidiary and associate investments.

He joined Moores Rowland in 1998 as Audit Supervisor In 2010, he was appointed by OMP as Chief Financial
performing the audit function for a number of listed and unlisted Officer taking responsibility for the strategic financial and
companies. operations management of a R27-billion property portfolio.
Neville is a member of the South African Institute of Chartered
After completing his articles, he joined one of South Africa’s Accountants (SAICA).
largest mining groups, Kumba Resources Limited, as Chief

Vusi Nondo, General Manager: oversaw the management of a R700-million development
Property Development and Investment portfolio. Later, he focused on developing and acquiring new
property investments in the office, industrial and retail sectors of
Vusi has several tertiary qualifications that provide a sound the market.
theoretical foundation for his role at Communicare. He holds
a Bachelor of Architectural Studies, Bachelor of Architecture, Vusi was a member of the Old Mutual Investment Executive
Postgraduate Diploma in Property Studies, BCom Honours in Committee, where he was responsible for the management of the
Financial Analysis and Portfolio Management and a Masters in Old Mutual SRI Real Estate Fund until his departure to initiate a
Business Administration - all from UCT. new venture, Urban Growth Management Company.

This is complemented by sound experience in the design, Vusi is a fellow of the Centre for Leadership and Public Values
construction and development of property and property based at UCT and Duke University and also a Bertha Scholar
investment. Vusi worked as a professional architect at Revel Fox of the Bertha Centre for Social Innovation and Entrepreneurship
and Partners Architects before joining Old Mutual Properties. based at The Graduate School of Business at UCT.
Initially employed as a Development Portfolio Manager, he

9

Jana Du Plooy, General Manager: a difficult post-recession period. By increasing internal efficiencies
Corporate Services and reducing cost drivers the team achieved the organisation’s
highest number of sales in the past decade. In the 2015 financial
Jana has an LLB degree from Stellenbosch University and qualified year, under her management, the sales team increased unit sales by
as an attorney and later as an Advocate of the High Court of 280%, revenue by 98% and profit by 97%.
South Africa. She will graduate with an MBA at the University of
Stellenbosch Business School (USB) in March 2016. An entrepreneur in her own right, she owned and managed her own
business for two years, laying the foundation for her passion for
Complementing her experience in the legal profession, Jana has entrepreneurship – the style that Communicare is now embracing.
worked in the retail and food and beverages industry. This has She is passionate about the economic empowerment of women
given her a broad understanding of business in general, and of and forms part of the management team of Change the Platform,
management in various contexts. a movement aimed at empowering women in business. She also
mentors entrepreneurs and start-ups on a voluntary basis.
She joined Communicare’s property sales team, Yes! Properties, as
Sales manager in 2013 and successfully lead the team through

Shaheen Adams, General Manager: In the public sector, he served as Senior Professional Officer for
Rental Property Management the City of Cape Town taking responsibility for finance and asset
management, which included focussing on strategy, policy and new
Shaheen is a graduate of UCT with an Honours Degree in Business business development.
Science and Masters in Science majoring in Property Studies. A
top academic achiever, Shaheen was awarded the prestigious He left the Western Cape Government Department of Transport and
National Research Foundation (NRF) Scholarship in 2009 and has Public Works (DTPW) to join Communicare. He served at DTPW as
membership to the Golden Key International Honour Society that Chief Director: Immovable Asset Management and Acting Deputy
honours the top 15% of academic achievers globally. Director General Public Works, taking responsibility for managing a
property portfolio comprising 6000 land parcels and more than
His professional career spans the parastatal, public and private 13000 buildings with a replacement value of R100-billion.
sectors. In the private sector, he has worked as a Broker and Asset
Portfolio Manager for the Pam Golding Group. Prior to his tenure in government, Shaheen worked for African Foresight
Network (AFN), a strategy and planning consulting firm.

10

RENTAL PROPERTY
MANAGEMENT

Mimosa Court

Rental Property Management is responsible for the management of Communicare’s with industry best practice. The new structure creates the foundation that enables
residential rental stock. It assumes the rental property management functions of our former Communicare to transition from a reactive property management approach to proactive
Social Housing division along with taking full responsibility for planned maintenance and asset management of its property portfolio. The new roles and structure of the team will
commercial leasing. not only improve the management of the portfolio but will also improve the tenant’s
experience of our services.
There are 38 complexes in the portfolio consisting of 3 375 rental units, which include a
number of free-standing houses. With one exception, these properties are all situated in During the year under review, Communicare’s detailed strategic planning process
well-located areas in the Cape Town Metropole where significant economic opportunity enabled the newly-formed Rental Property Management Department to clarify its
exists. These properties facilitate the social and economic inclusion of low income roadmap to greater efficiencies, effectiveness and the prudent management of its
households in Cape Town’s prosperous economy. portfolio. The interventions planned for the coming three years are important for the
organisation’s sustainability and future growth.
The establishment of the Rental Property Management Department was a key strategic
shift during the financial year to align Communicare’s property management operations

11

Despite significant challenges in the sector, the Social Housing division exceeded its closely monitored as Communicare implements various strategies to rebalance the
performance targets, as well as those set by the national regulator, the Social Housing portfolio’s finances.
Regulatory Authority (SHRA).

Key Performance YE 2015 YE 2014 Communicare SHRA VRAeVnCtaaAcl NCaonClcleYyctRRioaAnteTE
Indicator Result Result 2015 Target Threshold
115%
Rental Collection 104% 102% 95% 83% 1102%%
1051%,5%
Vacancy Rates 0,51% 1.3% 2% 8%
1001%%
Bad Debts 1,67% 0,9% 2,5% 15% 95%
900%.5%
Rental Collection
85%

JUulL--1144 AUugG--1144 SSeEpP-1144 OCctT--1144 NOovV--1144 DeECc--14 JaAnN--1155 FFeEbB-15 MaARr--1155 AApPRr--1155 MMaAyY--115 JUunN--1155

Target Total BTaillrignegt VaAcavnecryaRgaeteRent Collected

   

Our average rental collection increased by 2% from the previous year to 104%. This is Debt Collection
due to our strict credit control procedure and tenant interaction, and partially due to
advance payments from a few tenants. Rental collection and credit control will remain The process for debt collection is managed by staff in the three area offices and the
key focus areas, since the effective management of those critical areas impacts directly credit control team. The procedures followed ensure tenants pay their rent on time
on Communicare’s financial sustainability. and defaults are immediately followed up. The procedures include sending letters to
tenants, telephone calls and home visits.
RENTRAenLtaCl COolLleLctEioCn TION
115% Communicare offered assistance in cases where tenants experienced legitimate
110% Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 and serious financial difficulties (e.g. death of primary household income earner).
105% This assistance mostly took the form of three months temporary rent reduction. In this
100% financial year, 76 applications were approved for assistance to the combined value of
R 265,336. Communicare’s Credit Control Policy will be reviewed in the new financial year.
95%
90% Rental Charges
85%

Target Total Billing Average Rent Collected Communicare units are mainly leased at rates below the market rate. Typically, these
reduced rentals are discounted against the market by 30% or more. This cannot be
Vacancy Rates
  sustained by the organisation with rising costs in South Africa’s inflationary economy
and the cost of ensuring the proper upkeep of a property. The effect of these discounts
Vacancy rates have trended downwards and have reduced from an average of 1.3% are evident in Communicare’s high cost-to-income ratios, typically above 80%.
in the prior year (2014) to 0.51% in the 2015 financial year. Vacancy rates will be

12

This reality creates a paradox; residents complain about the maintenance of their rental Next year, the following internal and external capital upgrades and repairs and maintenance
property while also being dissatisfied with rising rentals due to their low incomes. are planned across our property portfolio:

To confront this dilemma, we reviewed our rental model during this financial year. It was • Drainage and sewerage replacements
evident that a combination of interventions are needed to improve the situation. These • Asbestos gutter and downpipe replacement
include reducing costs and the historic high level of subsidisation of tenants while increasing • Garage door and wooden roof fascia and verge board replacements
revenues by growing the rental portfolio and increasing diversity in the tenant base. This • Domestic water reticulation
will allow Communicare to rent a number of units at market rates while still discounting a • Kitchen cupboard, flooring and bathroom upgrades
proportion of units to achieve affordable rental rates. • Fencing and security installations
• Water meter installations
Maintenance
These improvements will upgrade the comfort and safety of our tenants while protecting our
Maintenance functions were previously fragmented across different divisions. With the property.
restructure, all maintenance functions will reside in one location under the Rental Property
Management department. Customer Relations Management

During the financial year, the capital works and scheduled repairs and maintenance across Our records show that 6,524 enquiries were received during the year (slightly down from
the portfolio mainly comprised repairs or replacements to roofs, roof fascia, verge boards, 6,544 in the prior year) and that 99% were satisfactorily resolved. We are also aware that
gutters, downpipes, plumbing, drainage and domestic water reticulation. there is much room to improve our engagement with our tenants and the processes involved
in delivering services to them.
In the financial year, we spent R 15,319,866 on corrective and scheduled maintenance as
illustrated in the table. In the coming year, we will set up a call centre to improve the logging and tracking of
queries. We will also review the interfaces between Communicare and its tenant base to
Maintenance Category 2015FY Total Spend identify more ways to improve our interactions.
Corrective / reactive maintenance R 4,504,631
Vacant reactive maintenance R 2,809,674
Routine maintenance R 1,611,314
Scheduled / planned operational R 6,394,247
and capital maintenance
Total R 15,319,866

13

Sakabula

14

COMMUNITY

DEVELOPMENT

Encouraging tenant involvement remained a focus in 2015. We Before Vereeniging Circle After
implemented various tenant engagement and community development
interventions while considering how to achieve greater impact. Computer Literacy

We promoted healthy tenant engagement by supporting the activities Our cooperation with Midrand Graduate School resulted in students volunteering their time to teach community members
of our Tenant Advisory Committees and focus groups. Several basic computer skills in November, and from March to May 22 community members participated in the training course.
activities coordinated from our Ruyterwacht Learning Centre, the
Service Centres and the Kraaifontein Social Services Centre provided Grade R learners of Sunshine Creche in Ruyterwacht also gained computer literacy skills through the online Click Foundation
opportunities for tenant involvement and community development. course, an initiative that also improves phonics and prepares learners for primary school.

Ruyterwacht Learning Centre: Health Awareness
Reclaiming Public Open Space
A Health and Wellness Project was facilitated for tenants by the MMI Foundation and various primary health stakeholders.
The Ruyterwacht Learning Centre offers many services including after- They provided services such as HIV awareness, blood pressure and diabetes testing and information on male circumcision.
school homework support, internet access, computer training and
a job-seekers programme. We campaigned to involve the local Active Tenancy
community in revitalising the Ruyterwacht Vereeniging Circle, which
was being used as a garbage dump and frequented by vagrants The following services were provided to promote active tenancy:
and gangsters. As a result of community action, the space has been • The celebration of International Older Persons’ Day
transformed into a safer and cleaner recreational area for youth. • Hosting the Golden Olympics in the Diep River Area
• A gardening programme with 101 gardeners and a garden competition
Soccer • Hosting various human rights awareness programmes
• The ‘Cooking from your garden’ initiative
The Communicare Action Soccer League continues to thrive with a
large number of youngsters participating in weekly soccer matches.
We sustained our partnership with the Arsenal Football Club (United
Kingdom) and hosted two junior coaches who mentored the youth in
our programmes at schools and with other NGOs.

Teams from Ruyterwacht and our Drommedaris and Bothasig Gardens
complexes, as well as boys from the Woodstock shelter and SOHCO,
participated in the annual Communicare action soccer tournament.

15

Zerilda Steyn Bursary Programme STUDENStuTdSenPtsEpRer IInNstiStuTtioInTUTION

We sponsored 15 tertiary students with bursaries totalling R191, 969. Bursary recipients were Communicare tenants and other 10%
students studying at five different higher education institutions in the Western Cape.
13% 32%
The students are enrolled in the following courses: LLB (4), B.Comm (3), B. Ed (3), Civil Engineering (1), Electrical Engineering 13%
(1), Journalism (1) Entrepreneurship (1) and Hospitality and Catering (1). Two of the recipients are final year students.
32%
Reducing Vulnerability Among Tenants
UWC CPUT NORTHLINK UNISA STELLENBOSCH
Our Social Development Officers assisted 75 vulnerable and indigent tenants with interventions to assist them to retain their
tenancy. For older tenants, this included assessing their capacity to live independently, referring them to appropriate sources
 
where social support is available and liaising with relatives to facilitate their involvement. In twelve exceptional cases we
placed tenants in very poor health into frail care in Communicare’s Healthcare Centre.

Statutory Social Work

This year marked the 20th year of Communicare providing statutory child protection services in the Wallacedene and
Bloekombos areas. Although the service is in high demand it is misaligned with Communicare’s strategy, and we took the
tough decision to explore an exit strategy. Despite this, our committed Kraaifontein team maintained excellent service to the
community and managed a monthly average intake of 60 new cases.

A New Tenant-Focused Social Development Programme

We have revised our social development programme to bring focus and improve impact and sustainability. Our new programme
will be located in the Communicare Foundation and will focus on supporting healthy tenant involvement and on creating an
enabling environment to support the economic mobility of Communicare’s tenants.

Our research into economic mobility shows that improved access to the following opportunities may achieve results:
• Improved educational levels
• Skills relevant to the job market and to increase employment prospects
• Information and resources and support/guidance that foster self-reliance and expand available choices
• A raised consciousness to cultivate hope for the future

In the year ahead, the Foundation will forge partnerships with various organisations to conceptualise and implement
programmes that improve access to these opportunities.

BUSISWE MGEDEZI, Zerilda Steyn Bursary Recipient
“Because I know my tuition fees and books are paid for
by Communicare, I am able to fully concentrate on my
studies and not worry about the financial side of things”

16

PROPERTY DEVELOPMENT
AND INVESTMENT

The future for the newly-constituted Property Development and Investment The outlook for sales in the Kuilsriver market is positive with a healthy demand
Department at Communicare is exciting, challenging and well-aligned to from potential purchasers, evident from the high number of enquiries fielded
changes taking place in the organisation. The purpose of the department is to by the Yes! Properties sales team. However, the infrastructure constraints
support the sustainable growth of Communicare through revenues generated and resulting moratoriums on development approvals in the Kuilsriver area
in property sales and from the development of new rental stock. instituted by municipal and provincial authorities will have a negative impact
on future revenues in the short to medium term. The long-term prospects for
The coming year will see key changes to the operational mandate of the the market remain healthy as evidenced by the consistent rise in prices and
department. While the development of property for sale and rental remain demand in the area.
fundamental activities, the team will also be responsible for investment sales
and property acquisitions. The planned maintenance function will transfer to In 2016, we will launch a further 140 single residential units
the Rental Property Management Department, where a portfolio management in the affordable housing market in the next three phases
approach is being adopted.
of the Montclair development located in Mandalay.
Development for Sale
The sell-out of the two initial phases demonstrated the depth of demand in
In the 2015 financial year, the department delivered a gross profit of this sector and the pricing of units in this development will remain competitive.
R37,9 million with a  gross profit margin of 40%. This generated a net operating
profit before tax of R17.6 million: an excellent performance for the financial year. On the macro-economic front, a number of key concerns have crystallised
in the period being reviewed. Rising consumer price inflation, specifically
Yes! Properties, our sales agency in Kuilsriver, is responsible for generating our building cost inflation, is an area of major concern as it is accompanied by
residential sales. The team had an exceptional year, successfully selling 154 weak growth in the South African economy. The South African Reserve Bank
properties against a target of 83. The bulk of the sales achieved were in the Monetary Policy Committee has adopted a stance indicative of its support of
first phase of the Montclair affordable housing development, a partnership with a cycle of rising interest rates within their inflation-targeting mandate.
Nation Housing where 76 houses were sold in Mandalay. The remainder of the
sales were achieved in the Jacarandas project (Kuilsriver) where 59 properties The impact of successive interest rate hikes will be transmitted to the property
were sold in the three current phases of this single residential development. An market through the decline in levels of affordability of already-heavily
additional 19 properties in the 50-unit Sonieke Crescent group development indebted South African consumers, the rise in interest costs on mortgage
launched in 2014 in Kuilsriver, were sold over the same period. The 154 sales finance and higher contracting and development costs. This will serve to
achieved in 2015 represents growth of 180% when compared to the 55 sales depress demand in the housing market, which we anticipate will be most keenly
achieved in the previous financial year. This translates into an outperformance felt in the middle income market that our residential sales developments serve.
of 86% of the sales target for the 2015 year. As a consequence, the forecast for residential sales in this market have been
reduced in line with market expectations.

17

Rental Housing Development 76affordable Jacarandas, Kuils River
houses
Activity in developing social and affordable housing 18
remained subdued due to headwinds generated by 154 properties
policy constraints in 2015. Alongside other established SOLD
social housing institutions, Communicare lobbied
national and provincial housing authorities to review the
Social Housing Regulations as they pertain to the values
of capital grants and the prescribed income bands. In
their current state, these regulations remain the principal
impediment to instituting viable investments in the sector;
they are constraining growth in social housing despite
its proven success in contributing to restructuring South
African cities.

Development Outlook

Over the next three years, Communicare’s Property
Development and Investment team will focus on the
following three key elements:
• Unlocking a pipeline of sales in existing properties

that offer good returns to the organisation
• Developing new rental housing assets for the social,

affordable or open market to be the primary source
of growth in the rental portfolio
• Acquiring land and unlocking currently-owned land
for development

Several underperforming properties in the existing rental
property portfolio that have the potential to generate
better yields have been selected for re-development.
These re-developments are central to our plans for the
2016 financial year.

CAPE RETIREMENT There is an increasing demand for retirement accommodation in the Western Cape; many more seniors
LIFESTYLES (CRL) are wanting to scale down while maintaining their independence. These seniors are looking for physical,
financial and healthcare security and a sense of community.

Our Cape Retirement Lifestyles (CRL) brand is ideally positioned to meet this demand and lifestyle
aspiration. The brand grew in strength from the strategic marketing initiatives we’ve implemented. These
include active involvement in the bowls community and participation in the recent Cape Retirement &
Lifestyles Expo held at the Lord Charles Hotel in Somerset West. We continue to create public awareness
using print media, shopping mall exhibitions and show houses.

The Rathfelder, Diep River

Superb Locations unit. Both villages have lush gardens and are very close to amenities and the Constantiaberg
MediClinic. Thornton Place near Pinelands comprises semi-detached single story cottages set in
Our Berghof retirement village, situated opposite the Cape Town MediClinic in Hof Street a quiet neighbourhood, while our townhouses in Rosehaven Gardens are located in the heart of
Gardens, offers outstanding value with stunning views across the city. In Diep River we operate Durbanville in walking distance from the CBD. Our villages are safe, well maintained and managed
the elegant The Rathfelder, as well as Trianon with its 47-bed frailcare centre and Alzheimer ’s by a dedicated team.

19

Increasing Popularity of Life Rights Active Ageing

Communicare, through its investment in retirement villages, was one of the pioneers We endorse the concept of active ageing and promote vibrant social interaction
of the Life Right concept. More and more retirement village developers are seeing in our lounges and dining areas. The nature of social activities is based on the
the value of the Life Right concept, providing security of tenure to the life right interests of our residents but includes various social clubs and events, fine dining
holder and a positive long-term income stream for the developer. Unlike sectional and recreational outings. At the same time, residents can retreat to the privacy of
title schemes, the developer remains involved as a stakeholder - ensuring the long- their apartments and cottages when they feel the need for solitude, peace and
term viability of the scheme and maintaining the physical assets. Communicare’s life quiet.
right sales have been steady throughout the year and our vacancy rate reduced
by 5% accordingly. Creating More Value

Operational and Service Excellence As Communicare intensifies its mission to grow as the leading affordable housing
provider in the Western Cape, it has become necessary to consider its investment
During the review period, we invested significant funds and effort to ensure that the in Life Rights as its CRL business serves a different market segment. In January 2015,
common areas in our villages are well maintained. In addition, we refurbished and a General Manager was appointed to review our strategy and business model
modernised units as they were re-sold to ensure that new residents move into a fresh and to find solutions that are in the best interests of the organisation and our life
new home. We also strive for operational and service excellence in the areas of right holders.
healthcare, food and beverage management, housekeeping, garden maintenance,
safety and security.

Life right

34suanleitss

R32,420,485

47

Healthcare beds

Cape Retirement & Lifestyle Exhibition

20

Mez Wallach, Muizenberg

HUMAN Employment Equity Profile Staff Turnover

RESOURCES 2015 2014 2013

Change Management No. % No. % No. % African Coloured Indian White Total
4 5 2 11
Change management received considerable African 30 27% 36 26% 35 28% Female 3 4 2 4 13
attention in the review period. Efforts were made to Coloured Male 7 9 2 6 24
help staff prepare for change while the organisation’s 60 55% 70 52% 63 49% Total
strategy was under debate and activities were Indian
coordinated to consult employees on the strategy White 2 2% 5 4% 4 3%
being considered. Once adopted, employees were Totals
engaged on the new strategy and its implications. 18 16% 24 18% 26 20% Absolute numbers in staff turnover increased by 10, totalling
24 in 2014. The total number of terminations was 31 with seven
By the end of the period a restructuring process had 110 100% 135 100% 128 100% fixed-term contracts terminating and two internships concluded.
commenced in order to successfully implement our The figure of 24 included 18 resignations, one retirement, four
plans. This restructuring process will conclude in the By the end of the financial year, the organisation had 110 dismissals including one through mutual agreement.
new financial year. employees. The average number of employees for the year under
review was 119. The average number of employees in the preceding Against an average number of 119 employees per month for the
21 year was 122. year under review, the turnover of permanent employees represent
a turnover of 20%. The resignations represent 15%, which is 10%
Representation of Black African staff increased slightly by 1%, greater than 2014.
while Coloured representation increased by 3%. Indian and White
representation decreased by 2% each.

Gender Profile Training and Development

Top Management Gender Total % Female
Senior Management
Middle Management Female Male April 2015 April 2014 April 2013
Junior Management R858,698 R588,168 R683,921
Semi-Skilled 10 1 100% Total Training Spend 692,478 466,002 518,210
Unskilled 10 30% Spend on Black employees 81% 79% 76%
Total 37 19 47% Spend on Black employees as % 19% 14% 9%
26 81% Spend on tertiary studies
9 10 46 52%

21 5 8 100%
110 60%
24 22 The organisation will invest in training and developing our employees to support them in
their new roles after the restructuring process is complete. The reorganisation and this
80 professional development process is expected to improve the delivery of services to our
tenants and customers.
66 44

50 STAFF TENURE Appointments
45
40 2015 2014 2013
35
Number of Employees 30 Group Fixed-term Contract Intern Permanent Total
25 African 5 1 1 7
20 Coloured 4 1 2 7
15 White 3 3
10 Total 2 3
12 17
5
0 5-9 years 10-14 years 15-19 years 20 years and more
  In anticipation of the restructuring in the 2016 financial year to align with the organisation’s
strategy, several vacancies were not permanently filled in the review period. Consequently,
0-4 years there were seven fewer appointments in 2015 than in 2014, a greater percentage of
fixed term contracts (71%) than in 2014 (42%), and only three permanent appointments
Staff Absenteeism compared with 14 in 2014.

2015 2014 2013 Of all the appointments made, 41% each were African and Coloured, and 18% were White.
122 122 123
Average number of employees 251 249 249
Average number of working days
Total number of sick leave days taken 940.34 728.24 675.35
Average sick leave days taken per person 7.71 5.97 5.49
Average sick leave as percentage 3.1% 2.4% 2.2%

22

Staff Giving Programme 70Winter

People matter most. This value is practically demonstrated Drive
by staff who passionately respond to basic community
needs through various acts of kindness. Our staff ’s pairs of socks and
generosity not only showed our commitment to be of packs of soup were
service to others but also renewed our connectedness donated to the Elim
with each other as people. night shelter as part of our winter drive
to assist the homeless.
Easter Egg Drive
Cash
65 Easter egg goodie in your
bags were donated Yearschildren’s meals were sponsored
to the disadvantaged
children attending the 8 for a full school calendar year
ACCV crèche in Albow Gardens and as part of the Peninsula School
Little Star Educare in Brooklyn. Feeding Scheme.

36Bags of 18

Love Youth

bags were filled with non- at Percy Bartley House,
perishable food for tenants Woodstock (a shelter for
facing financial hardship. homeless boys) received toiletries and sweets.

23

MARKETING AND STAKEHOLDER CRL WEBSITE LAUNCH
ENGAGEMENT

Support to Cape Retirement Lifestyles to reduce red tape. Our partners in the public and financial Students peSrtuIndsetitnuttsiopner Institution
sectors understand our commitment to increase affordable
Marketing, advertising and public relations support was housing delivery. 10% 10%
provided to Cape Retirement Lifestyles. The Cape Retirement
Lifestyle website (www.caperetirementlifestyles.co.za) was Strategic Communications Plans 13% 13% 32% 32%
upgraded to improve navigation and visual appeal. Since
re-launching, the website has attracted 19% new visitors. Communications plans were also developed for key INCREASED CRL WEBColumn1
  TRAFFIC
strategic interventions (such as the possible exit from the 13% 13%
We supported the formation of the Cape Retirement Lifestyles’ Kraaifontein service) to ensure that the organisation
CARL Forum - a membership organisation comprising seven proactively managed its risks and that our partners were 19,4%
of the largest life rights operators in the Western Cape. The appropriately informed.
forum planned and hosted the first-ever, Cape Town-based 32% 32%
Retirement and Lifestyles Exhibition in 2015. Shaping Future Marketing and Public 80,6%
Relations
Our partnership with Western Province Bowls was RUEWTCURNINCGPUVTISITOUNRWOSCRTHLICNPEKUWT VUISNINTIOSOARRSTHLSINTEKLLENUBNOISS
  ACH STELLENBOSCH
consolidated with our renewed sponsorship agreement Future marketing and public relations activities will be shaped
 
enabling CRL to enjoy prime advertising space at five of the by our intention to have more effective communication with
premier bowling venues in Cape Town. stakeholders. Our Marketing and PR Department is being
restructured to engage strategically with our stakeholders
External Stakeholder Engagement and to proactively develop mutually-beneficial partnerships.
The department will also contribute to Communicare
Communicare’s strategy fundamentally changes the way advocating for the policy and regulatory changes needed
we are structured, conduct our business and our operating to successfully implement our plans.
style. Recognising that our stakeholders are affected by the
change an integrated communications plan was approved. Key projects planned for the new financial year include:
Its main objective is to communicate Communicare’s goals • Rebranding
and plans to our key stakeholders and to improve our • Conducting a tenant satisfaction survey
understanding of their needs and priorities. • Introducing online access to view and apply for rental

Apart from generating support, our engagements will focus accommodation
on ensuring that our tenants understand Communicare’s • Implementing new customer relations systems and
purpose and strategy, our suppliers understand the
standards and quality of service we require and our efforts protocols
• Exploring the appropriate use of digital media to

achieve the marketing objectives

24

INFORMATION The Information Technology (IT) Department delivers the technology platforms and
TECHNOLOGY information and data analytics services required to achieve Communicare’s goals.

25

During the period under review, the IT Department initiated and implemented the following projects: The IT Department is well positioned to deliver value for Communicare and its customers.
The department is pursuing the following goals:
• Inter-branch telephony system
• CRM base platform - maintenance, leasing, and property sales modules • Digitalising core business processes
• Information management platform • Creating business value through the innovative use of digital platforms
• Backup solution • Facilitating business intelligence insights through the provision of business analytics and
• Intrusion prevention system
• VIP employee self-service platform general information services
• Integrated property asset register • Expediting digital inclusion for the majority of discount rental families

Rosehaven Gardens

26

CORPORATE Mr Martin Kearns Mr Monde Skade
GOVERNANCE Development Executive, V & A Waterfront Engineer
BEng (Hons) (University of Leeds) MSc Eng (Southern Illinois University)
Board of Directors Director as from 10 October 2014 BSc Eng (Southern Illinois University)
Director as from 13 July 2000
The Board comprises 15 directors; 14 are non-executive and Ms Nonhlanhla Mjoli-Mncube
one is executive. The composition of the Board is as follows: Owner and CEO of Mjoli Development Ms Lala Steyn
Company and Eziko Investments Manager: Schools and Education Investment Impact Fund of
Independent non-executive directors MCRP (UCT) South Africa, Old Mutual Alternative Investments
PGDip Technology Management (Warwick University) MBA (UP)
Ms Anne Emmett, Chairperson BA (Fort Hare) BA (Hons) Political Philosophy (SU)
Independent, development funding, Cert Finance (Wharton Business School) Director as from 5 December 2013
monitoring and evaluation consultant Cert of Executive Development (Harvard)
MPhil Monitoring and Evaluation (SU) Director as from 5 December 2013 Mr Isaac Matheta Swafo
BA (Hons) History (UCT) Founder of Dibata Corporate Governance
Director as from 10 December 2002 Prof Noeleen Murray-Cooke BTech Human Resource Management (CPUT)
First Director, Wits City Institute and A.W. AdvCert Alternative Dispute Resolution (AFSA & UP)
Ms Nosiphiwo Balfour, Deputy Chairperson Mellon Foundation Chair of Critical Director as from 5 December 2013
Property Practitioner Architecture and Urbanism at the University of Witwatersrand
BSc (Hons) Property Studies (UCT) PhD (UCT) Ms Nicky Swartz
PGDip Investment Analysis and MArch (UCT) Marketing practitioner
Portfolio Management (UJ) BArch (UCT) BA (Unisa)
Director as from 10 October 2014 BAS (UCT) International Diploma in Advertising (Hons) (AAA School of Advertising)
Director as from 5 December 2013 Director as from 11 February 2014
Mr Pramod Daya
Owner of Mindspring Consulting Ms Lusanda Netshifhefhe Ms Carol Kholeka Zama CA (SA)
MSc Computer Science (University of Oregon) KZN Regional Manager at TUHF Senior finance executive professional
BSc (Hons) Computer Science (Unisa) MBL (Unisa) BCompt Hons (CTA) (UNISA)
BSc Computer Science (UCT) MSc Development Planning (Wits) BComm Accounting (Wits)
Director as from 11 February 2014 HDip Development Planning (Wits) Director as from 11 February 2014
BA (Wits)
Director as from 5 December 2013 Executive director
Ms Amelia Jones
Adv Roseline Nyman Ms Anthea Houston
Social Worker and social development pioneer Advocate at the Cape Bar Chief Executive Officer, Communicare NPC
DPhil Social Work honoris causa (UWC) LLM Labour Law (UWC) PGDip Organisation and Management (UCT)
B (Hons) Social Science (SU) LLB Labour Law (UCT) Banking Licentiate Diploma (IOBSA)
Dip Social Science (UWC) BA (Law) (UWC)
Director as from 5 December 2013 Director as from 5 December 2013 The Board operates under a formal Board Charter published on the
Communicare website. The organisation and its directors subscribe to, and
27 are committed to, complying with the principles of openness, integrity and
accountability as advocated in the King Report on Governance for South
Africa (King III).

Vacancies occurred during the review period and new appointments • Audit and Risk Committee • Remuneration Committee
to the Board were made after a rigorous selection process coordinated Non-executive director members: Non-executive director members:
by the Nominations Committee. The process ensured that the Board
has the necessary expertise and capacity to provide strategic C K Zama (Chairperson from 22 September 2014) I M Swafo (Chairperson from 31 October 2014)
direction and oversight to the company, while remaining representative B L E Khan (A member and Chairperson until A T Hardie (A member and Chairperson until
of the demographics of the community served by Communicare. 22 September 2014, when he resigned) 31 October2014, when he retired)
N Mjoli-Mncube M N Skade
An induction process took place for the new directors and various M N Skade E L Steyn
board development activities for all directors were arranged.
The work of the Audit and Risk Committee is guided by an Audit The committee oversees the company’s remuneration policy and
The Board has ultimate responsibility for the strategic direction of the and Risk Committee Charter adopted by the Board of Directors. The practices. As such, it advises the Board on executive remuneration,
company, sound governance as well as legislative and regulatory Charter notes that the committee assists the Board by monitoring terms of employment for all senior executives and directors’
compliance. Accountability to all stakeholders remains paramount in financial reporting, internal control systems, auditing as well as remuneration and fees.
all board decisions. legal and regulatory compliance. Meetings are attended by the
company’s internal and external auditors and by various members • Nominations Committee
Executive Board of management. Non-executive director members:

The following directors are members of the Executive Board, which has Communicare has appointed PricewaterhouseCoopers as its A Emmett (Chairperson)
specific responsibilities under the Delegations of Authority Framework: internal auditors. PricewaterhouseCoopers operate independently A T Hardie (A member until 31 October 2014,
under the guidance of the Audit and Risk Committee. They monitor when he retired)
A Emmett (Chairperson) the operation of the internal control systems and report findings A R Jones
A T Hardie (A member until 31 October 2014, and recommendations to management and the committee. The N F Murray-Cooke
when he retired) committee monitors whether corrective action is taken to address
A W Houston (Executive Director/CEO) control deficiencies. The committee assists the Board to ensure its composition is
CK Zama adequate to enable it to execute its duties. This is achieved by
R M Nyman • Social and Ethics Committee driving the formal process for appointment, induction and the
E Steyn Director members: ongoing development of directors. The committee also monitors
I M Swafo succession planning at the level of the Board, Chief Executive Officer
A Waters (Finance Director and member until R M Nyman (Chairperson) and for senior management appointments.
30 April 2015, when he resigned) A W Houston (Executive Director / CEO)
L N Netshifhefhe • Information Technology Committee
Company Secretary I M Swafo Director members:

David Cudlipp served as the Company Secretary until 1 October The committee’s mandate is to approve and monitor policy and P Daya (Chairperson)
2014, when Melonie Kariem took over. Melonie served until 26 May strategy regarding social and ethical issues in the organisation, A T Hardie (A member until 31 October 2014,
2015 and a new Company Secretary is being recruited. including matters relating to social and economic development, when he retired)
responsible citizenship, promotion of equality, prevention of unfair A W Houston (Executive Director / CEO)
Governance Structures discrimination, addressing corruption, environment, health and N Swartz
public safety, labour and employment practices and stakeholder C K Zama
To assist the Board in discharging its duties, several committees have engagement. The committee also acts as custodian of the
been established. The committees are briefly discussed here. Unless organisation’s Code of Ethics. The Information Technology (IT) Committee was established in March
otherwise indicated, management attends committee meetings by 2014. The committee is responsible for IT governance, monitoring
invitation. In the year ahead, the committee will oversee the change and evaluating significant IT investments, the effective management
management process to ensure effective stakeholder engagement. of IT assets, and aligning IT with the organisation’s performance and
sustainability objectives.

28

DIRECTOR ATTENDANCE AT BOARD AND COMMITTEE MEETINGS: 1 JULY 2014 TO 30 JUNE 2015

  Full Board Executive Board Audit & Risk IT Nominations Remuneration Social & Ethics

No. of Meetings 45514 2 2
4 5 n/a n/a 3 n/a n/a
Emmett, A n/a n/a
Balfour, NV (appointed as Director 10 3 1 n/a n/a n/a n/a n/a
October 2014) n/a n/a
Brosens, AFJ (resigned 31 July 2014) 1 n/a n/a n/a n/a n/a n/a
4 n/a n/a 1 n/a 2 2
Daya, P 2 1 n/a 1 2 n/a n/a
45514 n/a n/a
Hardie, AT (retired 31 October 2014) 4 n/a n/a n/a 4 n/a n/a
n/a n/a
Houston, AW 3 n/a n/a n/a n/a n/a 2
n/a n/a
Jones, AR 2 n/a 2 n/a n/a n/a 1
Kearns, MG (appointed as Director 10 3 n/a 4 n/a n/a n/a 2
October 2014) 1 n/a
Khan, BLE (resigned 22 September 2014) 2 n/a 2 n/a n/a 2 n/a
2 2
Mjoli-Mncube, NS 3 n/a n/a n/a 3 n/a n/a
Mkunqwana, VJ (resigned 18 December 4 n/a n/a n/a n/a n/a 2
2014) 3 3 n/a n/a n/a n/a n/a
Murray-Cooke, NF 4 n/a 5 n/a n/a
3 4 n/a n/a n/a
Netshifhefhe, LN 2 4 n/a n/a n/a
4 n/a n/a n/a n/a
Nyman, RM 3 4 4 1 n/a

Skade, MN 4 2 5 n/a n/a

Steyn, EL

Swafo, IM

Swartz, NM

Waters, A (resigned 30 April 2014)
Zama, C K (appointed to Executive Board
10 November 2014)

29

THE REMUNERATION OF DIRECTORS AND PRESCRIBED OFFICERS’ WAS AS FOLLOWS:

Name Category Salary Fees Retirement and Other1 Total Total
Executive2 R R medical aid benefits 2015 2014
A F J Brosens12 Director contributions
A W Houston Director 102 467 - R R R R
C D G Mathias3 Director 1 099 725 -
V J Mkunqwana4 Director - 17 241 97 733 217 441 1 101 118
A Waters5 Director - - 192 452 52 771 1 344 948 421 392
N Fowler13 481 504 - 829 319
780 246 - - - -
229 868 108 338 365 999 955 841 1 144 932
211 355 1 072 318 1 185 584
- 80 717 232 613
- - 2 745 -
- 30 000
Non-Executive Director - 30 000 - - 60 000 - Notes
N Balfour6 Director - 60 000 - - 279 815 25 046
P Daya Director - 279 815 - - 15 000 428 832 1 Other benefits including car allowances
A Emmett7 Director - 15 000 - - 389 414 2 Executive directors remunerated as
A T Hardie8 Director - - - - 388 647 salaried employees
A W Houston Director - - - - 60 000 35 092 3 Retired 31 October 2013
A R Jones Director - 60 000 - - 45 000 4 Resigned 18 December 2014
M G Kearns6 Director - 45 000 - - 31 386 - 5 Resigned 30 April 2015
B L E Khan9 Director - 31 386 - - 112 652 6 Appointed 10 October 2014
P J Kleinsmidt10 Director - - 4 800 - 7 R 39 815 relates to 2014 fees paid in 2015
N S Mjoli-Mncube Director - - - - 64 800 60 277 8 Retired 31 October 2014
N F Murray-Cooke Director - 60 000 - 6 600 60 000 35 092 9 Resigned 23 September 2014; fees paid to
L N Netshifhefhe Director - 60 000 - - 66 600 55 185 Metropolitan Health Corporate (Pty) Ltd
R L Nyman Director - 60 000 - - 60 000 35 092 10 Resigned 31 December 2013
A R Sholto-Douglas11 Director - 60 000 - 7 200 45 139 11 Resigned 25 March 2014
M N Skade Director - - - - 135 624 12 Resigned 31 July 2014
E L Steyn14 Director - - - 67 200 105 416 13 Acting CFO appointed 15 April 2015
I M Swafo Director 2 693 810 60 000 - - 60 000 14 Paid to School and Education Grant Impact
N Swartz Director 60 000 - - 60 000 - Fund of South Africa NPC
C K Zama 3 478 396 60 000 60 000 35 092
60 000 529 386 618 565 60 000 25 046
Total 2015 60 000 25 046
Total 2014 778 720 425 229 4 902 962
1 061 201 6 619 037

1 936 692

30

“Communicare Ethics Assurance
values our
tenants and Communicare is committed to ethical conduct. A statutory Board Committee, the Social and Ethics Committee (SEC), assists
the Board to ensure that the organisation is ethical in its dealings inside and outside the company. A number of initiatives
purchasers as inside the organisation reinforced ethical conduct in the review period and are briefly outlined below.
key stakeholders,
• Code of Ethics
critical to the The organisation reviewed its Code of Ethics which guides the ethical conduct of all directors and employees who are
sustainability of expected to practice the values of Honesty, Respect, Fairness, Reliability and Confidentiality.
the organisation.”
• Policy review to promote ethical behaviour
The organisation reviewed a number of policies that enable ethical behaviour. A review of the Fraud Prevention Policy
bolstered Communicare’s zero-tolerance approach towards fraud and corruption. The Conflict of Interest Policy review
aligns with the requirements of the Companies Act. This policy provides greater clarity on the handling of matters where real
or perceived conflicts may arise. Directors are invited to declare their interests annually and these are recorded by the
Company Secretary. Declaration of interests is also a standing item on the agendas of Board and Board Committee meetings.

Communicare subscribes to an independently managed whistle blowing disclosure service to enable people to anonymously
report possible fraud, corruption, dishonesty and unethical behaviour that may have an impact on the company. The service
provider improved their systems during 2014 resulting in greater integrity over incident-reporting.

A new Whistle Blowing Policy was drafted and will be adopted in the year ahead. The policy encourages people to come
forward and communicate their concerns regarding possible unethical conduct in our operations and offers safeguards
against harassment and victimisation to such whistle blowers.

• Ethical employment practices
An Employee Communications Forum member represented our employees at the Social and Ethics Committee meetings
during the review period. The Committee reviewed employment practices in respect of the Employee Climate Surveys and
the development of the Employment Equity Plan. In the year ahead, the Committee will oversee the effects of the change
management process to ensure sufficient and appropriate engagement with staff and our key stakeholders.

• Stakeholder engagement
A Communications Plan was developed to guide engagement with our key stakeholders. Communicare values our tenants
and purchasers as key stakeholders, critical to the sustainability of the organisation. We are committed to understanding their
needs and appropriately adapting our services and products. Simultaneously, we are engaging with our stakeholders to
ensure that they understand our goals and objectives.

31

RISK

MANAGEMENT

Effective risk management is critical to the sustainability of the
organisation. We therefore continue to refine our processes for
preventing, measuring and mitigating risk.

A risk workshop was held to identify the top business risks so that
action could be taken to limit these.

A fire and fall prevention plan was implemented to reduce risk in
complexes with older tenants. Regular fire drills occurred with staff
acting as fire wardens. Regular information on risk hazards and the
prevention of hazards was also given to staff.

The organisation’s Health and Safety Committee met quarterly to
discuss incidents and make recommendations. Regular bush clearing
occurred to limit the risk of veld fire on our vacant land holdings
and the organisation remained a member of the Cape Peninsula Fire
Protection Association.

To give effect to the organisation’s zero-tolerance approach to
unethical conduct, the Code of Ethics was reviewed. A draft Whistle
Blowing Policy is under discussion and the integrity of reporting via
the outsourced whistle-blowing hotline was improved.

During the new financial year we will further assess and adapt our risk
management framework to reflect the outcomes of the restructuring
and align with our new strategic plan.

Morningstar

32

VALUE ADDED   2015 2014
STATEMENT   R R
     
30 June 2015 Income from sales
  193 329 452 140 879 107
33 Less: operational costs   
  87 208 314
Value Added from Trading Operations 121 602 491
     53 670 793
Net income from investments
  71 726 961 1 041 084
Total Value Added   
  54 711 877
Distributed As Follows: 3 554 065
Management    13 497 270
 
Employees 75 281 026 24 056 468
    
Social investment    2 882 534
Community projects 200 132
Emergency fund expenses 12 151 899 14 321
Enterprise development    158 186
Feeding project 8 154
Healthcare expense 27 501 910
Indigent subsidy - Social Housing tenants    1 910 591
Poverty alleviation 319 901
Study bursaries 1 889 526 4 438
  112 101 266 811
Taxes paid 5 696
  45 866 -
Retained for investment 3 093
  14 275 605
Total Distributions 1 136 169
262 693 54 711 877
Reconciliation to Annual Financial Statements: 4 350
  319 558 14 275 605
50 383 969
Retained for investment (as per above)    16 065 215
Fair value adjustment investment property 6 371 192
Fair value adjustment life right holders liability (64 249)
Impairment of assets    (10 260 450)
Deferred taxation raised 27 366 499
70 400 090
Net Profit for the Year   
75 281 026

  
  
  

27 366 499
128 545 338

(141 609)
(67 430)

(21 666 211)

134 036 587

STATEMENT OF FINANCIAL POSITION AT 30 JUNE 2015 STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2015
      
Assets         
2015   2014   2015   2014
  R  R   R R

 
Non-Current Assets
     Revenue 192 706 845   140 354 741
  2 052 490 722   1 909 877 077 Fund raising income 3 680   8 633
24 478 838   24 058 086 Healthcare income  
Property, plant and equipment Management fee income 4 941 811   3 644 728
- Land and buildings 20 491 544   20 437 000 Property sales income 1 747 676   1 634 459
- Plant, equipment and vehicles 3 987 294   3 621 086 Rental income and recoveries 87 076 191   44 019 218
Investment property 2 009 675 345   1 876 258 184 Subsidy income 97 780 788   90 010 954
Land held for future development 18 239 412   9 145 299   1 156 699   1 036 749
Investment in subsidiary -  - Cost of sales      
Rental lease receivable 97 126   415 508   (56 881 021)   (28 686 494)
       Gross Profit      
Current Assets        135 825 824   111 668 247
  143 194 921   113 788 101        
Expenses      
Trade and other receivables 5 181 455   5 792 090 Building and property costs (106 212 401)   (99 548 722)
Inventories 18 216 841   46 860 167 Finance and support costs (43 022 889)   (41 196 391)
Investments - call and deposit accounts 119 270 128   60 647 249 Health care and meal costs (10 611 252)   (9 842 306)
Bank balances and cash 526 497   488 595 Marketing costs (4 003 195)   (4 045 948)
       Office and computer costs (5 029 450)   (2 971 528)
Total Assets 2 195 685 642   2 023 665 178 Personnel costs (3 392 189)   (3 559 594)
       Social costs (1 427 391)   (1 665 608)
Funds and Liabilities      Staff costs (753 356)   (1 002 991)
         (37 972 679)   (35 264 356)
Funds and Reserves      Profit/(Loss) Before Other Gains/Losses and Fair Value Adjustments      
    29 613 423   12 119 525
     Other gains      
Non-distributable Reserves 1 832 184 625   1 698 083 753 Fair value adjustment investment properties   1 050 747
       Fair value adjustment Life right holders liability 502 773   50 383 969
Accumulated profit 1 810 927 794   1 551 328 061   128 545 338   16 065 215
Life right funds/reserve 8 608 451   6 795 744 Profit from Operations    
Owner-occupied property revaluation reserve 11 976 967   11 976 967   (141 609)   79 619 456
Development reserve 495 413   118 433 596 Finance costs      
Social alarm reserve -  9 549 385 Interest received   (2 139 597)
Actuarial gain and loss reserve 176 000   -   158 519 925   3 180 681
       Net Profit before Tax      
Non-Current Liabilities          80 660 540
317 971 778   285 879 699 Taxation charge (2 242 822)    
    5 796 887   (10 260 450)
Long-term loans 25 236 087   26 644 490 Net Profit for the year    
Life right holders liability 175 723 146   163 672 875       70 400 090
Loans from subsidiary companies 1 090 093   1 090 093 Other Comprehensive Income 162 073 990    
Deferred grants 25 447 773   25 447 773      
Deferred taxation liability 85 577 679   63 911 468 Owner-occupied property revaluation      
Post-retirement medical aid obligation 4 897 000   5 113 000 Actuarial gain (28 037 403)  
           359 227
Current Liabilities      Total Comprehensive Income for the year     -
45 529 240   39 701 726   134 036 587  
  38 573 704    
Trade and other payables 36 324 028   70 759 317
Provisions 3 912 627   1 475 185  
Taxation payable 1 124 028   -     
Current portion of long-term loans 1 918 881   1 902 513
       -
Total Equity and Liabilities 2 195 685 643   2 023 665 178 176 000
 
134 212 587
 

34

STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2015
  
  2015   2014
Cash flows from operating activities R  R
    
Net profit for the year 134 036 587    
70 400 090
Adjustments to net profit for the year :    
Cost of sales 56 881 021    
Depreciation   28 686 494
Interest received 1 462 704  
Finance costs (5 796 887)   1 194 508
Post-retirement medical aid obligation   (3 180 681)
Levies on life rights 2 242 822  
Net provision (released) raised (40 000)   2 139 597
Profit on sale of plant, equipment and vehicles   114 000
Profit on sale of land held for future development 2 165 284  
2 437 442 2 417 579
(123 596) (590 028)
(336 088)
- (223 493)

Fair value adjustment on investment properties (128 545 338)   (50 383 969)
Fair value adjustment on life right holders liability 141 609  
Rental lease receivables (raised) released 318 382   (16 065 215)
Taxation charge   (205 324)
  28 037 403  
Operating cash flows before movements in working capital     10 260 450
     
Decrease (Increase) in trade and other receivables 93 217 433  
Decrease (Increase) in inventories     44 227 920
Increase in trade and other payables    
Payments made to contractors 610 635  
  3 811 200   (2 276 005)
Cash generated /(utilised) in operations   (506 876)
  84 392   3 410 659
Finance costs (32 048 895)  
Interest received   (43 802 500)
Taxation      
Net cash inflow (outflow) from operating activities 65 674 765  
    1 053 198
Cash flows from investing activities      
  (2 242 822)  
Proceeds on disposal of non-current assets   (2 139 597)
Acquisition of other non-current assets 5 796 887   3 180 681
Reclassification of land held for future development (5 247 165)   -
63 981 665 2 094 282
 
   
   
  561 101
124 900
(6 756 582) (17 325 886)
(9 094 113)  

Net cash outflow from investing activities (15 725 796)   (16 764 785)
       
Cash flows from financing activities      
       
Decrease in borrowings  
Increase in life right holders liabilities (1 392 035)   (1 226 315)
Transfer to management associations 11 908 662   12 777 481
   
Net cash inflow from financing activities (111 715)   (293 231)
       
Net increase/(decrease) in cash and cash equivalents  
  10 404 912   11 257 935
Cash and cash equivalents at the beginning of the year      
   
Cash and cash equivalent at the end of the year 58 660 781   (3 412 568)
   

61 135 844 64 548 412
   

119 796 625 61 135 844

35

SAWAS House 36